View from City Road: Revolting shareholders

Small shareholders everywhere are revolting. Inspired by successes at Amstrad and Greycoat, the property company, aggrieved investors in ailing companies are more willing than ever to show that they are not prepared to roll over and die at the merest threat of aggression from management and banks.

Ferranti shareholders are understandably upset that, if GEC's pounds 10m offer succeeds, the banks, which are owed pounds 110m, will escape completely unscathed from their involvement with the ill-starred electronics company.

By accepting a token 1p a share offer investors will allow the banks to swap their lending from a highly doubtful Ferranti to an impeccable risk like GEC and avoid the uncertainties of administration.

For this generous act the shareholders get next to nothing and there is a real threat that the GEC offer will collapse due to lack of interest among the many disillusioned Ferranti shareholders.

In an ideal world the portion of Ferranti's pounds 110m debt that is at risk from an administration could be made available to Ferranti shareholders in return for their agreement to a takeover. Without some such move, common enough in the US, the efforts of Ferranti shareholders seem doomed and self-defeating.

At Queens Moat outraged shareholders appear to have hit the target ahead of Monday's annual meeting to approve the accounts. Yesterday's High Court petition, based on the notion that shareholders need details about the notorious pounds 1.2bn property valuation 'gap', could render Monday's proceedings irrelevant.

The lower the property valuation the more Queens Moat shareholders will be diluted in a swap of bank debt for equity. More importantly, mortgage debenture holders want a higher valuation or they will enforce security and seize some hotels.

The new team at Queens Moat must agree to come completely clean with these details on Monday or risk a derailed financial reconstruction.